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5th Annual Telecom Asia Readers’ Choice AwardsTelecom Asia 2013 Insight SummitNovember 29, 2012 Kuala LumpurPlans for 2013: Where are the key opportunities and what are the challenges?To gain insight into the most pressing issues facing telcos as they look to the new year, Telecom Asia is holdinga one-day Insight Summit for senior-level executives from across the region.The forum will allow telco decision makers to discuss key challenges and opportunities, and to share theirpriorities for 2013.The day will kick off with presentations by two senior analysts/consultants: The first will take a close look atthe highlights of 2012, what were the key successes, what were the trouble spots and where were the missedopportunities; the second speaker will take a look ahead, forecasting the growth areas, outlining strategies toslow margin declines and highlighting trends that will have the most disruptive impact on telcos.In the afternoon two additional panel discussions will be held concurrently. Each panel will bring together fiveto six telco executives and a senior analyst from a leading research firm. All attendees will be asked to sharetheir ideas on ways to revive growth, boost profits and streamline operations. The objective is to brainstorm andoutline the key priorities on how to thrive in 2013 and beyond.The Summit will be followed by our annual Readers’ Choice Awards, starting with a cocktail reception at 5:30 pm.AGENDA 9:00 Registration & Welcome Coffee 9:20 Opening Remarks by chairman Tony Poulos, TM Forum market strategist and Telecom Asia anchor & columnist 9:30 Opening Keynote 1 A look back: 2012 Highlights -- key successes & the missed opportunities Andrew Hamilton, partner at Value Partners 10:00 Opening Keynote 2 A look foreword: Growth areas for 2013, strategies for success and the key disruptive trends Amrish Kacker, partner for strategy consulting, Analysys Mason 10:30 Presentation by sponsor 11:00 Coffee break 11:30 Panel Discussion If you had a clean palette to start with, what would you do differently? Moderator: Tony Poulos, Panelists: Farid Yunus, Redtone CEO (formerly chief strategy officer at Celcom) Wing K. Lee, YTL Communications CEO Andrew Hamilton, partner at Value Partners 12:15 Networking lunch 2:00 Panel Discussion 1 Business Focus: Key challenges and opportunities for 2013 Moderator: Joseph Waring, Group editor Panel Discussion 2 Technology Focus: Key challenges and opportunities for 2013 Moderator: John Tanner, Global technology editor 4:00 Coffee break 4:30 Wrap-up & action plan - Tony Poulos 5:30 Telecom Asia Readers’ Choice Awards -- cocktail reception 7:00 Telecom Asia Readers’ Choice Awards – awards ceremonyStay up to date on this Forum: http://tasummit.questexevents.net/ Sponsorship opportunities: Registration inquiries: Gigi Chan (Group Publisher) Will Ahmad Email: gchan@questexasia.com Tel: +852 2589 1338 Email: will@questexasia.com Tel: + 852 2589 1312

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Contents Subscribe to Asia’s best daily telecom news service: Volume 23 Number 8 October 2012 www.telecomasia.net Cover 12 Making money from prepaid data Operators prepare to cash in on the growing popularity of smartphones in prepaid markets featureS IP Capacity 16 Growth still strong, but slowing IP transit price declines accelerate – dropping 50% in NY – while internet capacity continues to expand, but growth slows to 40% One-to-One 18 Breaking into the LTE game 12 SmarTone CEO Douglas Li explains why LTE is about capac- ity, not speed, and how Hong Kong cellcos have managed to avoid the dreaded scissors effect Q&A: Wholesale Outlook 20 Consolidation on the horizon BICS chief commercial officer Nicholas Nikrouyan explains why multi-service players will come out as the winners in the transformation to IPX Viewpoint 22 Transforming the network for the digital age Telcos have an opportunity to transform their networks into starring roles that today’s customer demands are dictating 18 20 22 Country Focus: Indonesia 24 Collaboration: The path to growth Operators have to realize that their competitors are not just their traditional rivals but a whole army of content providers Post Show: Asian Carriers’ Conference 28 Wholesale players ponder using bilateral automation Wholesale players flock to Cebu, discuss automating process- ing of interconnect deals 7 30 242 October 2012 Telecom Asia www.telecomasia.net

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Parallels Summit presents hugeopportunity in the cloudAt a time of global economic uncertainty, an unparalleled trillion-dollar blue oceanmarket awaits savvy movers in the SMB cloud and hosting services sectors.Cloud computing has been empowering SMBs in the West with The Next Killer Appfeature-rich applications and other resources previously only available to Dwindling profits from email and websitelarge enterprises. While SMBs in Asia Pacific have been slower to catch development are spurring the hunt for theonto this trend, cloud adoption rates in the region is expected to grow “next big thing” to open up new high-significantly in the coming years. Parallels, a hosting and cloud services margin revenue streams in the hosted- andenablement leader, estimates the APAC cloud services market to grow cloud-services sector. In a panel discussion,to $19.8 billion in 2015, presenting a huge opportunity for the SMB cloud four key executives from Infratel, LuxCloud,and hosting services sectors in the region. Quest Software and Symantec discussed Leveraging opportunity through an evolving partner ecosystem was the nature of a game-changing new “killera key theme at the opening sessions at Parallels Summit 2012 APAC. app” to revitalize bottom lines. AccordingIDC’s Asia Pacific Group Vice President Sandra Ng kicked off the event to the panelists, the next killer-app for theby presenting how not all users and businesses are adopting cloud cloud has yet to manifest itself, but wouldservices in the same fashion or pace. This presents rich opportunities for definitely be one that significantly enhancesservice providers, hosters and IT channels, to capitalise on the upcoming communication and customer satisfaction,differentiation trends imminent in the marketplace. CRM, and the intelligent bundling of the right To this end, Parallels CEO Birger Steen outlined his vision of how mix of services to the right customer in thethe hosting and cloud industry here can tap into the Parallels partner most flexible manner – all at low cost and highecosystem to meet the growing demand for cloud services. Steen returns on investment.provided an update of how Parallels’ strategy, together with its previewof next-generation solutions such as the Parallels Cloud Server, can help Updates Business and Tech Trackspartners tap the trillion-dollar blue ocean market and reach the 148 million What do SMBs want from communicationplugged-in SMBs worldwide. Parallels Chief Architect and Executive and collaboration services, web hosting,Chairman Serguei Beloussov shared how hosting, cloud and IT would be virtual telephony services or other cloud-the norm a decade ahead, emphasising the need for businesses to be hosted services? Which services are theinnovative, resilient and flexible if they are to thrive in the next 10 years. most popular? Vital clues were provided at the business track of the Summit, whereDeveloped or Developing World? participants learned more about reducing In line with the event’s central theme of “Profit from the Cloud, a” server and labour costs while increasingvery fundamental growth impediment involving creativity and innovation efficiency. The technical track of the Summitwas addressed via keynote speaker Fredrik Härén, a Singapore-based featured deep insights into the new Parallelscreativity expert and lauded author. Automation and Plesk Panel 11 suites; hosted Härén pointed out that the polarization of the world into “developed” PBX; Microsoft Lync, and the Intel Openand “developing” nations has unwittingly imposed limits and biases on Cloud Vision & Strategy.innovation and creativity. This has wrought spectacular effects in the With economic woes clouding the fate ofmidst of the Internet era, where giant corporate household names have the western blocs, the annual Parallels Summitgone bust or lost their gloss; and the fates of entire blocs of “developed” is helping IT businesses to identify APAC asnations hang in the balance. Fredrik propounds a mindset change as the region where the great opportunity issimple as wiping the idea of being “developed” off our vocabulary. located. Of the trillion-dollar SMB revenueThis will break down cultural isolation and complacence and propel us spent worldwide annually, APAC details thefrom being mere consumers of knowledge to being idea foundries. We most profitable opportunities for deliveringwill then be well placed to serve as global catalysts of out-of-the-box cloud services to SMBs – it’s a region whichmindsets that will radically reinvent the world. simply cannot be ignored. Event highlight brought to you by Parallels

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John C. Tanner l tANNERApple loses its biteY ou don’t need me to tell you that we’re not just talking about any old app here. Apple’s decision to drop support We’re talking about a mapping app that har- for Google Maps in favor of its own nesses one of the key attributes of mobile – Maps application has been the big- location – and has already become central togest PR disaster for the company since the many users’ lives.AntennaGate hoo-ha with the iPhone 4. That’s not to say Apple necessarily made a At press time, reports continue to flood mistake by dropping Google Maps. Accordingin about the app’s various inaccuracies, par- to All Things D, Apple really had no choice.ticularly outside the US. In Japan, for exam- Its existing relationship with Google did notple, Maps is so riddled with erroneous info include support for voice-guided driving di-that local map service Mapion saw a three- rections, which is supported on Google Mapsfold increase in downloads for its iPhone app for Android, and Google wasn’t keen to hand(launched just a few months ago) in the first that differentiating feature over to a competi- John C. Tanner is globalweek of the iPhone 5’s release, according to tor unless Apple offered certain concessions, technology editor –the New York Times. which Apple found unacceptable. jtanner@questexasia.com Interestingly, this is not the case in China. Fair enough. But it doesn’t change the factAccording to the Wall Street Journal, Apple that Apple still replaced Google Maps with adeveloped a separate version of Maps spe- decidedly substandard service. And if Applecifically for China in partnership with localmapping services provider AutoNavi. And wants to be in the services business at all (see: iTunes, FaceTime, iMessage, iCloud, etc), it Apple replacedby most accounts, it’s more accurate than in- deserves to get hammered for that, even if it Google Maps withternational versions of Maps (as long as you does ultimately see services and content asonly use it in China, anyway – Chinese users means to the end of selling hardware. a substandardlooking for maps outside of China will find The irony, of course, is that the iPhone 5some data missing like landmarks and public may still be another record-setting winner, in service, and iftransportation stops). which case Apple has little incentive to take Moreover, according to China-based services as seriously as it takes devices. Apple wants totechnology blogger Anthony Drendel, Ap-ple’s Maps is a vast improvement over Google Second best be in the servicesMaps in China, especially outside of the big The thing is, Apple can only get by on so business at all, iturban cities and tourist centers. (The Chinese much goodwill these days because the iPhonegovernment’s tight regulation of mapping is no longer the king of the smartphone hill. deserves to getservices, and its strained relationship with Samsung overtook Apple in global smart-Google, may or may not be a factor.) phone market share in Q4 last year and has hammered for Either way, the fact that Apple had to do a been widening that gap ever since. And whileseparate version of Maps for China illustrates it’s true that Apple’s product strategy is de- thatjust how hard it is to build a reliable and us- signed to be a high-end niche that isn’t con-able mapping app – and Maps’ problems cerned with market share, that strategy onlyelsewhere demonstrates further just how far really works if you maintain the standardsahead Google is in the maps game (remember that people expect from the high end.Google Maps has been around since 2005) Apple failed to do that with Maps, andand how far behind Apple is. it failed in the face of a competitor that had And that matters far more than things something more seasoned and, for the mostlike whether, say, the iPhone 5 supports mi- part, just better. Apple has enough problemscro-USB. Having to pony up for an adapter is trying to convince everyone that the compa-one thing. Being forced to give up an app that ny’s mojo didn’t pass away with Steve Jobs. Itworks well in favor of a proprietary app that can’t afford more glaring failures like Maps.TAdoesn’t is something else entirely, becausewww.telecomasia.net Telecom Asia October 2012 7

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INDUSTRY ANALYSIS Singapore LTE market S TATS N A P heats up Average smartphone depreciates 34% S The average smartphone depreciates in value by 34% during a ingapore’s 4G scheduled to be completed by 24-month retail lifespan, but wide disparities exist between price market became 2013. brackets and brands. a three-horse To complement the LTE Research from Strategy Analytics attempts to shine a light race in Septem- launch, StarHub is upgrading on depreciation rates for the fast-moving smartphone segment, ber, with both its 3G network to DC-HSPA+, figures which are traditionally hard to quantify. StarHub and M1 launching doubling its 3G downlink The data, compiled from pricing points across 105 channels commercial LTE services. speeds to up to 42 Mbps. in 37 countries, highlight the impact of a smartphone maker’s ap- M1 launched its dual- SingTel, M1 and StarHub proach to its brand image on handset retail values. For example, iPhones depreciate at a substantially slower rate band 1800/2600-MHz LTE have all adopted 4G pricing over their first 18 months on the market than their rivals, due to service covering 95% of the strategies that abandon “big Apple’s focus on a premium brand image. Instead, iPhones slide in city state. This gave it a wider bucket” plans in exchange value by 25% once they reach between 22 and 28 months of age. reach than SingTel, despite for tiered pricing options. All According to Stuart Robinson, director for Strategy Analytics’ the latter’s nearly 10-month three have settled on similar PriceTRAX services, “iPhones have upheld a clear price differential headstart. prices for the lowest 2GB data compared to their counterparts.” SingTel’s 4G network is plans – around S$40 ($32.50) As one of the first high-spec iPhone competitors, Samsung’s not scheduled to reach 95% and the largest 12G plans – Galaxy S1 also held its price over the early parts of its life-cycle coverage until early next around S$200. This 12GB due to having fewer competitors to contend with. year. The operator launched allocation is a significant HTC’s low-priced Wildfire S had an extraordinarily low depre- dongle-only LTE services in reduction on the previous ciation rate, suggesting that entry-level smartphones are more resistant to price declines than their higher-end peers. December 2011, introduced data bundles for operators’ Second-generation smartphones including the Samsung S2, its first smartphone plans in premium 3G plans. Nokia N8, LG Optimus and BlackBerry Curve 3 8520 have mean- June and its first tablet plans But there is some jostling while all depreciated at a similar level, as competition kept pressure in August. for position in the middle, on prices. M1 selected Ericsson with both M1 and StarHub Strategy Analytics said a future study will address the impact to upgrade its backhaul attempting to undercut of a smartphone maker’s portfolio refresh rate on retail prices of infrastructure to support the SingTel with their respective their older-generation products. LTE network. Ericsson will mid-range plans. become M1’s primary mobile According to Tolaga Smartphone depreciation: backhaul provider over the Research’s Dianne Northfield, next several years. Under the “the outcomes of Singapore’s Down by one-third deal, Ericsson will be provid- experiment with tiered data ing microwave and optical pricing plans are of interest systems as well as network both in terms of their impact management solutions from on the overall uptake of LTE its product portfolio. Deploy- services, and specifically as ment has already commenced, a direct strategy by mobile the vendor said. operators to [convince] exist- Not to be outdone, ing 3G customers to migrate StarHub commenced its LTE to 4G. service on the 1800-MHz “In the case of Singapore band. The LTE network the decision for consum- initially covers Singapore’s ers will likely come down to central business district, as whether advertised and actual well as Changi Airport and 4G speeds, along with the Singapore Expo, and will – yet to be proven – reliabil- be expanded to reach more ity of the new 4G networks, than half of the island by the provide compelling triggers to fourth quarter. Nationwide switch plans or indeed opera- LTE network coverage is tors.” TA Source: Strategy Analytics8 October 2012 Telecom Asia www.telecomasia.net

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Regulators dole out INSIGHT ONE MONTH’S TELECOM RESEARCHpenalties for outages >> Regulators risk stifling the internetF Proposals to impose regulations on the global internet would harm growth and ines imposed on SingTel and Thailand’s Dtac innovation worldwide, with flexible governance required to maximize the economic in September underline the potential financial advantages of the technology. Analysys Mason warns in a report that proposed impact that even brief service outages can have. International Telecommunications Regulations (ITRs), which are being readied for the ITU’s World Conference on International Telecommunications (WCIT) could impede IDA Singapore fined SingTel S$300,000 investment in the infrastructure required to support the growing internet population, ($244,000) for a disruption of the operator’s which is projected to reach 3.5 billion by 2020. The internet as it stands has evolved“lio Voice” service last year, due to teething problems at based on commercial considerations not regulatory dictates, and investments areservice launch. best achieved without internationally sanctioned regulatory intervention, the report The disruption affected SingTel’s then new mio argues. Another problem with imposing regulations on the internet is the issue of sovereignty. An estimated 98% of internet content can be stored in servers, and isVoice digital fixed-line telephone service in parts of often spread across multiple countries for caching purposes.Tampines, Changi and Pasir Ris for varying periods over Internet global growth: Lessons for the futureOctober 28 and 29, and in parts of Bukit Panjang, Bukit www.analysysmason.comTimah and Woodlands on November 4. The regulator’s investigation narrowed the fault >> VoLTE may help cellcos fight OTT playersdown to a hardware capacity limitation of the optical Mobile operators are banking on VoLTE to make up for declining traditional voiceline terminals (OLT) at the Tampines exchange and the minutes. Average MoU fell more sharply in APAC in Q2 than in any other regionBukit Panjang exchange. worldwide, with a decline of 7.36%, ABI Research estimates. In this context, SK Explaining the decision to impose the fine, IDA said Telecom, LG U+ and MetroPCS have introduced the world’s first VoLTE services, in a bid to counter the competition from OTT services such as Skype, Viber, Whatsappthat as the cause of the service disruptions was a hard- and FaceTime. The ability of VoLTE to overlay rich media content over voice, and theware limitation in SingTel’s equipment, the regulator cost savings of sending voice over packets, could help operators stay competitivewas not satisfied that SingTel had taken adequate steps against OTT VoIP providers. In contrast to declining voice minutes, mobile data trafficto ensure sufficient hardware capacity was provided. is surging worldwide. Overall 4G traffic is expected to swell at a CAGR of 147% But the fine follows a S$400,000 penalty imposed through to 2017, compared to a CAGR of just 70% for 3G data traffic. Messages sent stayed relatively stable in Q2, increasing 0.16% in APAC.by IDA on SingTel in May for a service disruption in Mobile data traffic & usageSeptember 2011 – despite the problems lasting less than www.abiresearch.coma day and no actual outage occurring. SingTel custom-ers did report difficulty making and receiving calls, and >> SDP better suited to B2B than consumer marketaccessing SMS, MMS and mobile data services during Operators will spend a projected $24 billion on service delivery platform (SDP)the day in question. software and services between 2012 and 2016. According to Infonetics, operator Dtac, meanwhile, accepted a 10-million baht interest in SDP is increasing across both emerging and developed markets. Operators($320,000) fine from regulator NBTC for a 65-minute in developing markets remain focused on enabling consumer application ecosystems via app stores and API exposure strategies, while in developed markets, telcos arepartial network outage on August 28. investing in SDP to address the enterprise and SMB segments. B2B offerings such as Dtac CEO Jon Eddy Abdullah accepted the fine enterprise app stores have greater promise for ROI than consumer-facing offeringswithout challenging it. However, he noted that only an and – perhaps more importantly – operators still have an advantage over consumerestimated 1.6 million users were affected out of the total app giants such as Apple and Google in this segment. Oracle lead the market for SDPcustomer base of 24 million. software and services in 2011, but had a mere one point of market share on second- placed Huawei, while Huawei itself was just one point ahead of Ericsson. The operator had already authorised the allocationof free airtime or data worth 100 million baht in com- SDP software and services www.infonetics.compensation for its disrupted users. In Dtac’s case, the NBTC decided to impose the finein part because this was the operator’s fifth network out- >> Tablet display shipments to jump 56% Booming tablet shipments will drive a 56% surge in tablet display shipments thisage in less than a year. year to 126.6 million units, IHS iSuppli predicts. Tablets are increasingly becoming But Abdullah has stressed that the outages do not the biggest growth market for small and medium displays. While the 9-inch segmentform a pattern, with prior outages caused by the cutting dominated by the iPad will continue to account for the majority of tablet displayof two cables and hiccups during the migration to an shipments this year - with an expected 74.3 million units due to be shipped - the fastest-growing market segment will be the 7.x-inch screens used in products likeall-IP network. the Samsung Galaxy Tab, Amazon’s Kindle Fire and other Android-based tablets. The But both fines will add fuel to the debate over 7.x-inch segment will increase its share of the total market to 32% this year, up fromwhether APAC regulators should take a heavy-handed 27% in 2011. Just 9% of shipments will be for 8.x-inch screens, and less than 1% willor a light-touch approach to overseeing their respective be for 5.x-inch screens.telecom markets. TA IHS iSuppli small and medium displays service – Fiona Chau and Don Sambandaraksa www.isuppli.comwww.telecomasia.net Telecom Asia October 2012 9

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asian telecoms this month Beijing China Mobile signs off on a plan to procure over 200,000 TD-LTE BT sets up a new joint research lab in Beijing with China’s Tsinghua terminals – mostly smartphones – for 2013. University. The pair are considering a number of research projects, in areas including business applications for the cloud. Hong Kong SmarTone reports a 36% increase in profit to $131m for the year ending in June, attributing strong demand for mobile data services. PCCW spinoff HKT picks up $13m worth of communications ser- vices contracts from Hong Kong’s Transport Department. Australia’s Telstra appoints former Telstra Global executive director Phil Mottram to lead up Hong Kong mobile subsidiary CSL. Bangkok The board of state-owned operator TOT resigns suddenly amid controversy over a rogue exchange and political interfer- ence in its 3G expansion project. Dtac is fined $320k by regula- tors, after suffering the latest in a series of mobile service disruptions. Ericsson Thailand warns the nation’s opera- tors to ready their networks for an explosion in smartphone sales, and the attendant mobile data demands. AIS launches 50,000 free Wi-Fi access points, to support the government’s Smart Thailand free public Wi-Fi initiative. Colombo Sri Lanka Telecom’s Mobitel contracts Huawei and ZTE to expand and upgrade its mobile network, as it prepares for the introduction of LTE services. Delhi Manila The Department of Telecom Norway’s Telenor is cleared to The Philippines’ Smart presses on with plans to abolish lo- find a new partner in India, over extends its LTE network to cal roaming fees within India some the objections of Unitech, its es- the 1800-MHz frequency time in 2013, despite warnings tranged partner in the Uninor JV. band, to accompany the from operators that they will have 2100-MHz services which to raise rates to compensate. Vodafone hints it may be willing launched in August. to pay the initial $1.47b tax bill the The government issues orders to government demanded from the operators including Bharti, Voda- 2007 acquisition of its Indian unit fone and Idea to call off their 3G – if the government forgoes the roaming pacts, under which they larger interest and penalty bill. have been offering services in areas where they lack 3G licenses.10 October 2012 Telecom Asia www.telecomasia.net

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movements Seoul z Apple’s new maps service provokes a wave of criticism over errors, SK Telecom reaches the 5m SK Telecom unveils two-way distorted satellite maps and a lack of detail, prompting CEO Tim Cook subscriber milestone for its LTE handover technology it has devel- to issue a public apology – and suggest alternative services to use. network, which launched in oped that supports both FDD and September 2011. TD-LTE in a single device. z Google overtakes Microsoft by market valuation to become the second most valuable technology company behind Apple. Tokyo z Microsoft wins a German patent lawsuit against Motorola Mobility, Softbank announces it will pay around $2.3b to buy smaller rival eAc- covering alleged infringement of a method of interfacing with an app. cess, in a deal set to move it up to second by mobile market share and The disputed functionality is built into Android. provide substantial assets for its LTE network. z Samsung wins a court order overturning a US sales ban of the Galaxy Tab 10.1, awarded to Apple in its patent lawsuit against the company. But Apple also files an appeal seeking a permanent US ban of the 10.1 and eight Samsung smartphones. Sydney NBN Co introduces a range of tailored packages for wholesale custom- z Qualcomm lends its weight behind TD-LTE, introducing a China- ers of Australia’s NBN fiber network to resell to businesses. specific version of its Snapdragon S4 processor supporting the standard, as well as UMTS, TD-SCDMA and CDMA. z Texas Instruments announces it will start pulling back from the wireless business, concentrating on embedded processors for cars and Singapore consumer electronics. StarHub and M1 both launch LTE OpenNet reveals it has doubled the networks, around a year after number of homes connected to z A report into international cybersecurity finds that APAC governments rival SingTel first went live with the NG-NBN fiber network in the are not collaborating effectively enough with their counterparts in other – at the time dongle-only – LTE last eight months. nations on security policies. services. Regulator IDA fines SingTel z Nokia unveils its first Windows Phone 8 smartphones, the Lumia 920 M1 contracts Ericsson to upgrade $245k for a brief disruption to its and 820. The former is set to support wireless charging technology and the backhaul infrastructure to sup- fixed digital voice service last year come in pentaband LTE and HSPA+ variants. port its new LTE network. – the second fine it has imposed on the operator this year. z Huawei and Intel sign an MoU to strengthen their engineering efforts to jointly develop new cloud and IT solutions. z AMD reaches a deal with software company Bluestacks to enable Windows 8 laptops and PCs powered by its chips to run Android apps through AMD’s AppZone player. Jakarta z Two major telecom standards groups team up, with the Open Mobile A former supplier for PT Telkomsel Alliance (OMA) joining the oneM2M Partnership. succeeds in having the company declared bankrupt, due to an Indonesian law z China Unicom expands into Canada, with the aim of providing a stipulating this for companies that have backbone between the nations, as well as services to Canadian compa- not paid their debts. Telkomsel, which nies with a Chinese presence and vice versa. hasn’t paid the debt due to a contract dispute with the supplier, is appealing. z Samsung reveals plans to debut the Galaxy S4, the latest in its flagship line of smartphones, in February. PT Indosat hands Ericsson a three-year contract to upgrade its radio and core net- z Telstra Global opens a new data center in Singapore, its sixth in the work infrastructure, in a bid to improve region, to provide colocation services for financial, media and technol- mobile broadband speeds and coverage. ogy enterprises. z Ericsson acquires Canadian OSS/BSS software provider ConceptWave Kuala Lumpur for an undisclosed sum. Maxis and media entertainment group Astro team up to co-develop and market z Research shows LTE users have finally overtaken Wimax subscribers in customer packages combining Astro’s the key 4G markets of Japan, South Korea and the US. IPTV offerings with Maxis’ fiber, wireless internet and ADSL services. z RIM posts a quarterly loss that is far narrower than analysts had ex- pected, due to a less severe than anticipated decline in shipments as the company waits to launch the first BlackBerry 10 devices.www.telecomasia.net Telecom Asia October 2012 11

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Making money from prepaid data Operators prepare to cash in on the growing popularity of smartphones in prepaid markets Joseph Waring, John C. Tanner S martphone penetration in developing markets in APAC is estimated at just 5%. But that’s projected to increase by more than four-fold be- tween 2011 and 2016, according to Strategy Analytics. There are already smartphones available for under $100, and in some cases under $50. Meanwhile, the smartphones that have already reached Asia’s de- veloping markets represent a huge market opportunity for mobile data services as affordable smartphones become available to people whose first internet experience has been – or will be – with mobile devices. However, operators in developing markets can’t simply look to their developed- market counterparts for business models targeting smartphone users – at least not beyond the small percentage of wealthy urban users. It’s not a question of what “G” the network supports so much as the fundamental differences between the market segments themselves, says Warren Chaisatien, strategic marketing manager at Ericsson.www.telecomasia.net Telecom Asia October 2012 13

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coverstory Ajay Sunder, Frost & Sullivan’s senior director for telecom, Asia Pacific, says operators are devel- oping innovative bundles of voice, SMS and data to target the growing population of smartphone us- ers. He says there is a huge potential for prepaid data services, and operators are just starting to tap this segment. “The growing number of prepaid data and bundled plans and their popu- dia tier and another for a stream- larity are a testimony of this opportu- ing data tier. And by offering data nity.” plans by shorter increments than a A recent study from Ericsson’s Con- month, operators can entice subscribers ited browsing (without video/media sumerLab covering Southeast Asia re- who aren’t ready to commit to monthly streaming), BBM and access to social ports latent demand for mobile data data plans, but who need occasional ac- networks on a daily/weekly/monthly services that not only conform to the cess. Behind the scenes, operators could basis (Blackberry Socialite). prepaid experience – top-ups, passes set fair usage limits for the day or week, Airtel’s Internet Data Pack gives pre- (either time-based or session-based), and throttle speeds when that limit is paid customers 500 MB on 2G and 500 boosters (i.e. paying a bit extra for a reached – with full disclosure to sub- MB on 3G networks with validity of 30 better game or video experience) and scribers. days from the date of recharge. The cost cross-service bundles – but also are ap- “In the longer term, getting smart- is 151 rupees (about $3) and customers plication and/or content-specific when- phones into millions of more people’s need to switch manually between 2G ever possible (i.e. Facebook, YouTube, hands gives service providers additional and 3G networks. Twitter, etc), allowing users to buy the data valuable to third parties, including exact services they want. over-the-top providers and potential Transparency crucial advertisers. As with postpaid subscrib- Sunder argues that one main obsta- Flexible plans ers, operators have the opportunity to cle to the adoption of data top-up bun- Many operators are offering free learn more about prepaid subscriber dles by prepaid consumers in emerging data access services for specific content usage patterns and offer them more economies is the non-transparency or to get prepaid customers to try out data. personalized plans,” Suriano says. lack of visibility on usage. “Billing for For example, Openet marketing man- Some work is already being done data is not something that can be pre- ager Martin Morgan says free Facebook to show the way forward. For example, measured/pre-calculated by user, be- access is often used by operators to get in the Philippines, Smart Communica- cause you do not know how data-inten- customers to use apps. Most operators tions is offering a package that allows sive a website/app is before loading. So also are testing both volume-based and subscribers to access Facebook for a 24- this typically means if a user is browsing time-based packages. hour period at 50 cents a pop. web applications, he cannot predict the Tekelec CTO Doug Suriano says “Those kinds of small packages with usage.” in the short term operators can let very low price points are well suited the For voice and SMS the user of course subscribers pick plans based on their micro-payment environment, and will can roughly calculate the cost based on preferences and budgets. For example, encourage new smartphone users to try minutes of use or number of messages operators can offer application-based data services,” says Chaisatien from Er- sent. service tiers with flat monthly rates, or icsson. Tekelec’s Suriano says the lack of access by the day, week and month. In Frost & Sullivan’s Sunder points to a integration between policy and real- both of these scenarios, pricing is flat so number of other success cases in APAC. time charging remains a barrier. Many subscribers don’t have to risk bill shock. Telkomsel in Indonesia offers daily vendors use proprietary interfaces or Multiple Telefónica properties, he or weekly Facebook packages starting policy systems that have difficulty scal- says, price data plans by application from 10 cents/day with a data-cap of ing to support many transactions and type, offering one rate for a social me- 3 MB (Kartu Facebook) and unlim- so much Diameter traffic.14 October 2012 Telecom Asia www.telecomasia.net

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“The process to top-up data plans,change plans in mid-month or do a try-and-buy approach all require a scalable We’re seeing is a second wave ofand reliable Diameter network. Also, policy, whereby old systems thatthe Diameter routing market is in thenascent stages, meaning Diameter traf- supported only a small number offic is often a complex mesh that limitsthe possibilities of creative new rate use cases, are being replaced withplans.” For telcos to be able to move into more sophisticated systemsprepaid data, says Openet’s Morgan,the key is back-office flexibility. Withdata services, he noted that new plans ging in APAC and other regions. it. “To accomplish operators’ desire toand tariffs often have a shorter shelf life “For one, policy and charging inte- create two-sided business models andthan traditional voice and text bundles. gration and scalability keep operators provide sponsored and toll-free appli-“Therefore, having BSS support rapid from quickly introducing new use cases. cations requires a solution that allowsproduct development is important. And We’re starting to see some movement on operators to securely expose APIs.”the pace of change is only going to in- the postpaid side, like with shared data He also points out that the defini-crease. When operators start to further plans. As prepaid smartphones grow, it’s tion of “end-to-end” is changing, withroll out direct operator charging, where only natural that offers for that market operators desiring to control policiesthey charge for third-party content, also will expand,” he says. to the handsets themselves. This wouldthen the need to offer system flexibility open up new avenues of cost controlwill only increase.” Policy control and revenue for all subscribers. The number and sophistication of Morgan insists that policy control For example, he says, service provid-new bundles, price plans and offers will is essential to giving operators the flex- ers could offer sponsored mobile dataincrease while time to market will fall. ibility to innovate with new services. He over a carrier-owned Wi-Fi networkMorgan said the result of this will be agrees that almost all operators have at a sporting venue if a third party ranincreased complexity in an operator’s some degree of policy management – advertisements on top of the content.product marketing department and the ranging from fairly straightforward fair Or, the operator could limit the signal-supporting BSS solutions. usage controls to advanced tiered ser- ling messages that chatty applications “To succeed with data and content, vice offers. send to radio towers, maintaining RANoperators will need to understand that “However, what we’re seeing is a sec- resources and giving operators somethey have many more usage variables ond wave of policy, whereby old systems defense against poorly-written applica-than they’re used to dealing with for that supported only a small number of tions.voice and texts, and so the opportu- use cases, are being replaced with more In terms of commercializing suchnities for delivering more segmented sophisticated systems. This new level services, Ericsson’s Chaisatien recom-and personalized offers are increased. of sophistication is required as opera- mends an end-to-end approach toThrough personalization customers tors roll out new services and look to policy control, which requires deepwill get offers that suit them. However, policy, not just as a method of control- interaction between the policy control-it is only by having a flexible and agile ling network usage, but as an enabler of ler, core and radio networks, as well asBSS, which can quickly support the new product and service differentiation. For integration of OSS/BSS and the servicelevels of complexity that data and con- example, providing differing QoS for layer, and orchestration between con-tent will drive, that simplification and different applications, prioritization for tent provisioning and customer-facingpersonalization can be delivered to cus- certain customers and offering a vari- functions. The payoff is the flexibility totomers,” Morgan says. able network experience as a marketing enable new services as new smartphone Suriano noted that most operators offer all need to be supported by a flex- applications emerge.now can handle the basic policy and ible policy management system.” Put another way, it will give op-charging use cases, like tiered services Suriano suggests that data plan in- erators the flexibility to innovate – andby volume and throttling for overages. novation can only be as flexible and that’s going to be a key capability inBut he says new use cases are still lag- powerful as the policy server behind competitive markets. TAwww.telecomasia.net Telecom Asia October 2012 15

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IP Capacity Robust yet slowing growth IP transit price declines accelerate – dropping 50% in NY – while internet capacity continues to expand, but at a slower growth rate I Joseph Waring nternational internet capacity con- of bandwidth growth outpaced increasesgrowth will continue in many countries, tinued to increase at a brisk rate in underlying average and peak trafficbut annual growth can be lumpy with – aggregate backbone bandwidth levels. strong growth in one year followed by more than doubled in the past two The report said the modest declineslower growth the next year.” years – but the growth rate slowed for the in utilization rates is not unusual. In theHe says that while mobile video is fifth consecutive year, dropping to just certainly growing quickly, it’s not any past five years, peak utilization rates have 40% from just under 70% back in 2008. more likely to generate international fluctuated within a fairly narrow band. According to a recent report from traffic than video accessed from fixed While some operators have predicted TeleGeography, international internet that soaring traffic would overwhelm connections. A large amount of video capacity jumped from 37 Tbps in 2010 (whether accessed by mobile or fixed networks, TeleGeography noted that this to 77 Tbps in Q2. has not proven to be true on interna- networks) is served locally from cach- The research firm’s annual survey es or from CDNs, so each time a user tional links. “Steady investment in new of internet backbone operators found capacity has contributed to remarkablywatches a video, international traffic is that the decelerating network capacity not always created. stable levels of average and peak traffic growth rates are mirrored in declining utilization on international networks.” Global IP transit prices continued rates of peak and average international to fall as declines accelerated in most The question is if the steady decline internet traffic growth. regions. The median GigE port price in since 2008 will continue for the foresee- TeleGeography reported that aver- New York fell 50% from Q2 2011 to Q2 able future or will it be reversed by say a age international internet traffic grew surge in mobile video traffic. 2012, compared with a 28% CAGR de- 35%, down from 39% last year, and peak TeleGeography research director cline over the past three years. traffic grew 33%, well below the 57% in- Alan Mauldin told Telecom Asia that TeleGeography reported that median crease recorded in 2011. The firm noted prices of GigE ports over the past five forecasting growth rates is tricky. “I’m that global average and peak utilization years dropped at a CAGR of 22% in New not sure I’d say it’d be the same rate of rates dipped slightly in 2012, as the rate decline. I suspect the slowing rate ofYork and São Paulo, 26% in Hong Kong and 31% in London. Mauldin reminded us that IP transit Capacity expands while growth slows prices only go in one direction – down. He says the underlying cost of transport capacity continues to get cheaper on a !"#$%"&()*+(*)&!*#!+%,-. per unit basis. “But as the major interna- tional backbone operators expend their networks into new markets, prices in #?)-*2#,(> O#2&1 9-*0," +*- (#-?)3#( "*7(#1 *.4 ) ,"# 2&X*-/,#-#, "76 3),)#(these cities tend to drop quickly as well.” 0).. 6**(, ),#-&,)*&. ,-&++)3>*0#?#-5 *,"#- ,4%#( *+ 3.*71 (#-?)3#( 0).. *.4 1-)?# c Despite sharp price drops glob- )3-#&(#1 .*3&.1#2&1 -#^7)-#2#,(> G*- #$&2%.#5 1&,& (,*-&9#+*-+)&3)&.#(,&6.)("2#,( ally, significant geographic differences &1 #,#-%-)(#( 2&4 6# .#9&..4 -#^7)-#1 ,* -#()1# 0),") ,"# )(,),7,)*A( "*2# 3*7,-45 ) 0")3" * ),#-&,)*&. ,-&++)3( 9##-&,#1>!"# )2%#,7( ,* %7(" 3*,#, 3.*(#- ,* #1Y7(#-( ) persist. For example, the median Hong (#-?#( &( &*,"#- 3*7,#-?&).)9 +&3,*- &9&)(,),#-&,)*&. ,-&++)3 -*0,"> / -#3#, 4#&-(5 9 Kong GigE price has remained 2.3 to 5.1 )3-#&(#1 -#.)&3# * 3*,#, 1#.)?#-4 #,0*-8( !"#$%"&()*+(*)&!*#!+%,-..*3&.3&3"#("&( "&1times the price of a GigE port in London ,* 2*?# ?)1#* 3*,#, !6!471/8!)*799:;< &B3.#&-5B1&2%#)9B#++#3,B*B.*9Y1)(,&3#B/,#-#,B,-&++)3B9-*0,"> over the past seven years. The latest survey found that the low- 91$:#04)#,;<1"-(,-=>"?1%) est 10-Gbps port prices have fallen to /!0+*&4 50 cents per Mbps or less in the US and 9#3,0)AB!)/G)1-,0O&)G-$#O)0)9,X>-)A@>Q,@)4&#OH ) ")9" )3*2# western Europe. The report said: “Cave- Source: TeleGeography N>&#O? ,&, -#5-#O#0& P /0&#-0#& Q,03K3&C$>00#$&#3,$->OO0&#-0,&>0,@ YE)EFFZ G*- 2*(, *+ ),( ")(,*-45 ,"# ##1( &1 ),#-#(,( *+ 3*(72#-( &1 67()#((#( RYE)EF=E Q>-3#-O,O >2+3R.#,-I P>+#O&$ 3*7,-)#(5 0"#-# 6-*&16&1(#-?)3#( 0#-# 2*(, 0)1#.4 &?&).&6.# &++*-1&6.#5 ->%&#O),-#)#"$@%3#3I &1 "&?#.&-9#.4 ("&%#1,"# /,#-#,> c*0#?#-5 ) -#3#, 4#&-(5,"# .*37( *+ 9-*0," "&( (")+,#1 1#3)1#1.416 October 2012 Telecom Asia www.telecomasia.net ,* #2#-9)9 2&-8#,(> @.*6&.6-*&16&1 (76(3-)6#-( #&-.4 1*76.#1 6#,0## e&-3" <;;N *>%-$#?)1#@#A#>B-,5C. D)EF=E)G-9#&-$,H)/0$I

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one-to-one Breaking into the LTE game SmarTone CEO Douglas Li explains why LTE is about capacity, not speed, and SmarTone’s Douglas Li how Hong Kong cellcos have managed to avoid the dreaded scissors effect L Joseph Waring TE is about lowering costs for operators and enabling new service innovation, says SmarTone CEO Douglas Li. “At the end of the day, it’s not about speed. Ca- pacity is actually more important than speed – it’s the rationale for LTE.” Because SmarTone had new spec- trum, by installing the next-generation technology “we could double our ca- pacity overnight.” “Actually, I’ve told my team that switching earlier and if you want to gain Li says SmarTone moved to LTE be- we will continue investing in HSPA to the 30% increase in spectral efficiency, cause over the long term, after the wide make sure the gap between the two isn’t then that’s the way to go in the long run. adoption of LTE, its cost base is going to material in terms of the customer expe- Looking at the key lessons learned come down. “The cost of equipment is rience in most use cases. Why? Because from the first wave of global LTE de- going to come down, the cost of devices I intend to use that full capacity since ployments, Li says the industry is re- is going to come down and new service users won’t be on 4G all the time.” learning the same lessons it learned innovation will be more likely because Depending on the LTE spectrum before. everybody is moving to it.” band deployed, many operators need to “Normally any new technology, no He says he’s worried that by touting continue to boost their in-building cov- matter what people say, takes time to the superior speeds of LTE customers erage with 3G. get the bugs out. That has been going on could be disappointed when they find “The reality is that even if I’m will- for more than 18 months. Things have that many apps only run slightly faster. ing to make the payments, can I change moved along, but it means someone had “There should be little or no difference my 2100-MHz spectrum to 4G now? to bare the brunt of going through that in the customer experience for most use No. There is no equipment available with the vendors and ironing things out.” cases between 3G and 4G – except for because there is no demand for it in The second issue, he says, is that de- large file downloads and speed tests.” the global market. No operator wants vice availability has always been a big He asks, do operators really want to tear down its 3G network, therefore bet. This is especially true with LTE with phones to indicate 3G and 4G? Because there is no demand and I can’t get the the proliferation of frequencies being operators won’t tear down their 3G net- equipment. I’m only in Hong Kong – used across the world. works anytime soon, he suggests mov- the vendors won’t give you the time of “I have no doubt that in time 4G ing to stating simply “narrowband” or day if you ask for 2100. Not for many LTE, in terms of scale in acceptance in “broadband”, noting that the intention years to come in fact.” global markets, will obviously be great- from the start was for 3G and 4G to He admits that if you’re not heav- er than 3G. But the fragmentation of work together interchangeably. ily invested in 3G you can think about frequency bands will clearly pose a tech-18 October 2012 Telecom Asia www.telecomasia.net

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nical as well as an economic challenge.” He notes that vendors will certainlywant to come up with chipsets that sell I’m only in Hong Kong – the vendorsin the greatest numbers. “Fragmenta-tion creates a variety of SKUs. I’m not won’t give you the time of day if yousure if they can condense every bandinto one chip. They probably can, but ask for 2100 MHzit takes time and money. But does itmake sense for the players in the eco-system?” This means the choice of frequency, portunities for operators to squeeze With the gradual adoption of mo-he says, is quite critical for operators un- performance out of the core specs of 3G bile broadband, data usage surged, butless you are a very big operator – like in and 4G. given the economic model based onthe US – and you can influence things a “We’re talking about the service net- the original pricing that all players coa-lot more. “But if you’re not able to influ- work layer to link the telecom system to lesced around, he says, the industry inence the supplier community, then you the content wherever that content is on Hong Kong somehow found a way toneed to make some bets.” the internet to customers on the device “get out of the valley” of low prices and The third lesson, he says, is master- of their choice.” low margins on data.ing the learning curve in the technical He notes that by doing real-time “I don’t believe we’ve had that scis-implementation of a new technology. network optimization, an operator sors effect. But if there is any more com-“As an operator we do a lot of things can shave time and resources here and pression on operators’ earnings, it willto enhance performance, so we have to there, which means it can squeeze more go back to pure competitive dynamicslearn to fit that into the LTE environ- capacity out of what it has. in the marketplace. If others decide toment. And there are things to develop “Clearly the greater the capacity you drop prices, we’re not talking about theon the OSS side and the BSS side, in have to serve a given number of cus- same thing. But the pricing works here,terms of monitoring the customer ex- tomers, the more you can enhance your and in fact data is priced in a way thatperience better in real time and display- performance over the chain of interac- allowed the industry to lift its profitabil-ing in a meaningful format to be used tions triggered by customers.” ity from a very low level.”by different parts of the organization.” Asked about how SmarTone is deal- He noted that competition in Hong He says there is a lot of work there. ing with the so-called scissors effect – Kong is so severe that coverage is far LTE is clearly faster than HSPA when the large gap between the required net- better than in most places.looking at the pure specs, with twice the work investment and the revenue gains “We sunk that cost [in infrastruc-download speed and 5-7 times the up- from mobile data subs – Li claims the ture] and went through that pain earlyload speed. Hong Kong market is slightly different on with 2G and 3G. Hong Kong opera- “Everything being equal, on a theo- from the rest because it became super tors took a beating on the revenue sideretical basis that’s the gap between LTE competitive a lot earlier. then, and now with data they’re reapingand HSPA+ dual carrier. With large file “We’ve gone down the route of the benefits. Ultimately, profitabilitydownloads where the network is just a cheap voice and bundled packages with now is more based on pricing – that’sbig pipe and the operator has few op- thousands of minutes and free intra- where the competitive dynamics are be-portunities to tweak the network, that is network SMS long ago. When data ing expresses.”kind of difference you’ll get, subject to came along with dongles, we priced it But he says he’s never happy with hislocal conditions.” at a point we thought was reasonable, overall margins. “Why am I investing But for more common uses – brows- and it yielded better profit margins than so much and getting so little in returning, streaming video, downloading apps our tradition voice and messaging busi- compared to all the other guys over-from app stores – Li says there are op- ness.” seas?” TAwww.telecomasia.net Telecom Asia October 2012 19

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Q&A: Wholesale Outlook Consolidation coming BICS chief commercial officer Nicholas Nikrouyan explains to group editor Joseph Waring why multi-service players will come out as the winners in the transformation to IPX BICS’ Nicholas Nikrouyan Telecom Asia: How is IPX going Why do you see the multi-service age their voice activities and their mes- to transform the way carriers do operators coming out on top? saging and mobile data activities. business? It’s going to be difficult for opera- It is going to go into more of a con- Nicholas Nikrouyan: One of the first tors and carriers that are very much solidated view, and operators are going things it’s going to do from a commer- focused on a particular product line. to want to deal with up to a maximum cial model is to change the parameters Multi-play carriers that are not only in of five carriers that can, from a service and the way we look at our P&Ls and the voice domain or the data domain level, provide all services. our balance sheets today in terms of and carriers that have a global reach I think we will not see as many car- the profitability of each product line from a capacity perspective are go- riers in five years time as we do today. and the way we define it today, which ing to have an advantage. So basically, It’s going to be basically though invest- is very much segmented by product and [it’s] the carriers that are on their own ments, organic or inorganic activities, so forth. and are multi-service providers today that they [the winners] can create an IPX is going to create an environ- or those that through partnerships environment where there is one seam- ment where a lot of the retail operators can create an environment of multi- less product offering to the custom. today, where the bundling effect comes capillarity and multiple service provid- in, are going to look at one bundle of ers. It’s an environment where bilateral How can wholesale carriers help pricing from a pricing structure and relationships are going to change to a mobile and fixed-line operators various levels of service going through hubbing model, where it’s going to be improve their customer satisfaction it. I think it’s going to impact fragmen- one to many relationships. and profitability in international tation in industry, because IPX is an en- From that perspective operators roaming? vironment where multi-service carriers around the world are going to look for With more people roaming around are going to be the ones who come out providers that can do this seamlessly the world, mobile operators and fixed as winners in terms of how the market and not have too many providers. Today operators in general can make their is going to evolve within the next few you see a lot of operators, for example, operations a lot more effective and ef- years. being interconnected in some cases to ficient in terms of how they provide hundreds of carriers to be able to man- services to the end-user customers. At20 October 2012 Telecom Asia www.telecomasia.net

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By doing what I call smart partnerships, we invest in creating the products and in making sure that the mobile and fixed operators don’t have to do the same investment on their own”BICS we invest a lot of money, time and As a wholesale player, what can you to invest and develop new products thatenergy in making sure we provide the do to mitigate continuously declining serve the mobile community. We tendservices so that the operators out there margins? to create a lot of services that add on topdon’t have to do the investment on their Partnerships are very important in of the basic layer of voice in terms of re-own. There is no longer the need for that aspect. The fact that we all don’t porting and making sure the operatorsevery operator out there doing individ- need to do the same level of investments understand the behavior of the custom-ual investments to be able to serve their and repeating, creating and inventing ers. Any type of value-added services weend-user customers. the wheel over and over again. There can put on it and new product lines that The basic principle for any operator is no doubt, especially in the voice do- we can add on top of what the industryis to provide the best service possible main, that you see declining margins. has today I think is going to be mitigat-to the customer, which is seamless and When you look at retail operators in lo- ing that decline.at the right pricing structure. Carriers cal markets with triple-play and quad- It’s going to be very difficult tosuch as BICS can provide those types of ruple-play and bundling effects, a lot of mitigate some of the declines thatservices. them see voice as a value-added solu- we’ve seen in voice. The other thing is By doing what I call smart partner- tion that is given away basically for free. that the more consolidation that takesships, where we invest in creating the When we talk about IPX, for example, place, where there is going to be a fewproducts and in making sure that the there is a lot of discussions as to how very large players out there, I think thatproducts work and that the mobile and voice in that environment is going to be should also mitigate to a certain extentfixed operators don’t have to do the priced and monetized. the consolidation of the finances as well.same investment on their own, I think The declining margins are going to But it’s investments in a new prod-those types of partnerships can create a continue, there is no ifs, ands or buts ucts, it’s being creative and basicallylot of value for the end-user customers. about it, and the more competition making sure that we respond to the And the service that they get is also there is the more it’s going to take place. customers’ requirements and needs andat the highest level, because we are not We need to make sure we move up the provide services that they see value incompeting in the same market for the value chain. using and trying to monetize that in thesame customers. From our perspective we continue end. TAwww.telecomasia.net Telecom Asia October 2012 21

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view point By Geoffroy Deschamps, Luc Grimond, Monte Hong – Accenture Transforming the network for the digital age Telcos have an opportunity to transform their networks into starring roles that today’s customer demands are dictating W e live in a digitally and converge their internet access (such consumer devices, has dramatically demanding world, as IP DSL and fiber), IPTV and wireless impacted data consumption of wire- especially as the thirst networks. less subscribers. Some CSPs have had for data continues to In addition, CSPs will need to en- 8,000% growth on their networks over grow. To support new hance their current networks with real- the last three years. If they have not data services communications service time measurements, data correlation already done so, operators will have to providers (CSPs) need to transform and prediction, and customer-specific stop unlimited data plans, increase the their networks in ways more profound profile and behavior and location-based per-gigabyte price of data plans, and than the analog switch off, the creation information. They will need to improve monitor these outsider customers and of the cellular network or the transfor- coordination across network planning, implement fair-use policies. mation to all-IP environments. delivery and operations to get network On the supply side, operators should It isn’t going to be easy. And as de- organizations to work together. increase capacity to capture the value mand escalates, tremendous constraints To address all these challenges, CSPs generated by the extraordinary demand will be placed on networks, impacting will have to master three types of net- for data, upgrade to next-generation the entire end-to-end network life cy- work capabilities. networks and install fiber networks all cle, from network planning to opera- the way to the cell sites or to the curb. tions. CSPs will learn how to transform 1. Planning & engineering Additionally, operators should find al- their networks and their support sys- To successfully fulfill growing ca- ternative ways to offload traffic in stra- tems, which will take them into the next pacity requests, operators should man- tegic areas. generation, by using powerful tools for age both the supply and demand side One solution is to deliver mobile infrastructure, delivery and operations. and find alternative ways to offload data traffic through the Wi-Fi access The changes will be monumental, traffic from the bandwidth-constrained network, which improves the quality of since, as operators upgrade their net- networks such as the cellular backhaul. service and user experience, and avoids works to fiber and 4G, they have to On the demand side the ability of localized network congestion issues. plan for the all-IP transformation, sun- networks to deliver high-bandwidth Using Wi-Fi offload is becoming an set their legacy voice network (such as media content, combined with the in- important part of many carriers’ net- POTS or plain old telephone service), crease in screen size and resolution of work strategy to improve network per-22 October 2012 Telecom Asia www.telecomasia.net

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formance in busy areas. CSPs should cation, device type, demographics and CSPs should recognize that consider-consider strengthening this strategy payment history. able value can be extracted from ex-and adapt it to various environments, Using the data, CSPs could, for ex- isting products, which may be usedsuch as stadiums, airports or residences, ample, offer a service to credit card by millions of customers. As a result,using home-based Wi-Fi routers and companies for their high-limit credit CSPs should consider restructuringfemto-zone services. customers, sending alerts to both cus- their product portfolio in a way that CSPs should also consider creating tomer service representatives and cus- allows the network and IT organiza-separate strategy and planning func- tomers when a purchase or debit is tions to streamline their operations andtions to identify emerging technologies made in Singapore using a card while processes and take cost out these high(mainstream and otherwise), define the the person’s cellphone locates them in fixed-cost businesses.serve strategy and specify the required Bangkok. Ordinarily, the marketing organiza-supporting network architecture. In tion sets the requirements for the net-addition, CSPs should consider the op- 3. Operations work and IT organizations to supportportunities available through a well-ex- CSPs, of course, need to effectively their growth agenda. In this case, theecuted network-sharing venture. control their operational costs while roles should be reserved, with the net- Based on Accenture’s experience, a dealing with an increasing number of work and IT organizations setting thewell-executed network sharing venture complexities, such as interconnected requirements for the marketing organi-has the potential to reduce standalone and converged services, and the pro- zation to support their cost-reductionrun costs by 20-40%. From one-third liferation of technologies and devices. agenda. Systems and network invest-to two-thirds of those benefits are root- This requires streamlining operations, ments should be capped and limiteded in cost avoidance while the balance redesigning their organizations, pro- to solving critical issues or to develop-results from actual cost reductions. cesses and systems, and finding ways ments that will facilitate product ra-Also, network sharing can help CSPs to lower the cost of operating existing tionalization and customer migrationsignificantly accelerate deployment networks such as 2G and POTS. At the to next generation of products.speed, plug coverage gaps and ultimate- same time, they should transition thely improve the customer experience and costs of planning, building and operat- The outsourcing optiongrow revenues without increasing net- ing existing and new networks and ser- CSPs that want to transition to awork costs. vices to next-generation networks. more efficient, revenue-generating op- One way to achieve this is by stream- eration should also consider outsourc-2. Delivery lining operating models with well- ing as a strategy that can both reduce Finding ways to monetize their net- defined, functional “building blocks” costs and improve operations. By out-work assets is undoubtedly at the top of that standardize processes. One North sourcing a spectrum of network opera-most CSPs’ lists. One way to do so is by American CSP used this modular ap- tions – such as planning, engineering,making the network itself “intelligent”, proach to reduce order cycle time from provisioning and management. Oneconverting raw network data in a sim- 30 to 60 days, to 21 days, while sustain- North American CSP achieved 40%ple format for marketing and commer- ing a 60% volume increase and reduc- cost savings and experienced improvedcials purposes using network analytics. ing costs by 22%. service in a number of areas, includingThere is huge value to dynamically link Other CSPs balance operation ex- the percentage of orders meeting thecustomers to their products and servic- cellence by including in their operating customer-desired due date.es. Network analytics, used effectively, model a set of measurements that work It’s certainly not an easy time forcan enable CSPs to proactively respond across a range of apparently conflict- CSPs and their strapped networks.to quality of service issues, improve the ing key performance indicators (KPIs) However, by taking appropriate actions,user experience and allow the network in functions that include expenditure they can take hold of a unique oppor-itself to be a core competitive advantage (capex/opex), customer experience, tunity to place their networks into theand differentiator. network and service quality, or adop- starring role that today’s customer de- While network analytics enables tion of new technology. Still other high mands are dictating. TACSPs to leverage information from the performing CSPs operate their growing Geoffroy Deschamps is a managernetwork to improve customer profiling, products and markets differently than and Luc Grimond is a senior managerit is also possible to use data gathered existing products. with Accenture’s communications, me-to develop customer-focused offers When considering products such as dia and technology strategy practice;aligned with their needs and history. 2G, ATM DSL or POTS, CSPs should Montgomery Monte Hong is Accen-Data analytics aggregates and analyzes think with the end goal in mind – typi- ture’s managing director for the com-network data, based on things like lo- cally “platform retirement”. However, munications industry groupwww.telecomasia.net Telecom Asia October 2012 23

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Country Focus: indonesia Serene Chan, Frost & Sullivan Collaboration: The path to growth T he Indonesia mobile commu- foothold with a 75% share of the mar- sion from the Saudi Telecom when the nications market is known for ket. Clearly, the established players have key stakeholder raised its shareholding being intensely competitive. the financial muscles and brand equity to 80%. More recently, Bakrie Telecom The market remains highly to counter price-cutting measures from and Sampoerna Telekomunikasi started promising with abundant the smaller operators. working toward a share swap to inte- upside opportunities. However, with However, the competitive landscape grate the two businesses under a single mobile penetration approaching 120%, and value chain are changing with the management. there is increasingly less room for sub- emergence of over-the-top services and The consolidation of resources and scriber growth. numerous content providers offering scale are accompanied by a greater em- During the most recent financial dis- voice and messaging services for free. In phasis on the customer experience, with closure, a number of operators reported a price-sensitive market like Indonesia, moves to improve the quality of calls, further downward pressure on ARPU. we can be certain that consumers will connections and mobile internet speeds Clearly, the market conditions signal an jump on them. The innovativeness of key to driving growth. urgent need to shift from a subscriber- operators will be put to test. The strategy comes as no surprise based model to a revenue-generating The smaller players have been re- given that Indonesia’s smartphone pen- one to achieve future growth. sponsive to market challenges as they etration rate of 12% is causing mobile Smaller operators’ primary strategy prove their resiliency through mergers operators to feel the competitive pres- has been to aggressively cut prices. As and acquisitions. Notably, Mobile 8 and sure from over-the-top players. The all players retaliate it has become clear Smart Telecom last year integrated their Android operating system is well po- that competing primarily on price is assets and created a new brand identity sitioned to overtake RIM in Indonesia. not sustainable even if the market is still and tag line – “I Hate Slow” – that struck With Android smartphones priced be- expanding. Despite having more than a chord with consumers. Axis, another low $300 and getting cheaper, mobile ten mobile operators for years, the big fast growing operator, received $1.2 bil- operators are bracing themselves for three players maintained their strong lion in support for its network expan- unprecedented challenges.24 October 2012 Telecom Asia www.telecomasia.net

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Greater collaboration would enable operators to focus on brand commu- nication and educating consumers on their value proposition” Although the emergence of afford- sumption needs, including their choice We believe that greater collabora-able smartphones is arguably a contrib- of mobile apps and content and usage tion would enable operators to focusutor to declining voice and messaging pattern at different times of the day to on brand communication and educat-revenue, the rising adoption also gives develop a pricing model around those ing consumers on their value proposi-operators the opportunity to differen- characteristics. tion using non-technical jargon thattiate themselves in a way that was not At the same time, in delivering on consumers could relate to. It has barelypossible in the past. First of all, the pro- their promises for better internet speeds been a year since the government hadliferation of white-label smartphones and wider coverage, the operators’ cur- to cancel all mobile value-added ser-offers the opportunity for mobile oper- rent priority would be to enhance their vices to address mounting complaintsators to subsidize smartphones at a low- networks to cope with exploding data from subscribers who were shoved wither cost. Secondly, an effective bundling consumption coming from a larger unwanted value-added services. To re-strategy comprising devices, voice, mes- number of subscribers. But given that gain consumers’ trust, operators needsaging, data and value-added services ARPU has remained tight for many op- to launch a range of attractive mobilewould enable operators to generate erators, capital expenditure would be a commerce applications and services.small-screen revenue streams. Higher strain on their resources. Although years of fierce price com-data usage could be encouraged with With these challenges in mind, a petition has generated a sense of mis-the additional bundling of multi-SIM few questions arise. Is the network in- trust among operators, they have to re-cards for smart devices to cater to the frastructure key to differentiation and alize that their competitors are not justmarket’s multi-SIM culture and grow- generating higher returns? Would a their traditional rivals but a whole armying popularity of tablets. collaborative approach be a viable busi- of content providers offering a plethora While bundling seems like an obvi- ness model? Would the sharing of next- of services for free. TAous strategy, an operator’s success de- generation infrastructure bring about Serene Chan is an industry analystpends heavily on its ability to identify a win-win outcome to lower costs and in Frost & Sullivan’s ICT practice, Asiaand assess its target segment’s data con- accelerate network deployment? Pacificwww.telecomasia.net Telecom Asia October 2012 25

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CSL appoints CEO Robert Vrij has become president OpenCloud names CTO Telstra has appointed of global sales and marketing while Telecom software supplier Phil Mottram to lead Stephen Carter has been appointed OpenCloud has appointed former its Hong Kong mobile managed services president and EVP Vodafone and Airwide executive Phillip subsidiary, CSL. of corporate restructuring. Philippe Stubbs as its new CTO. Stubbs replaces Mottram is currently Keryer is now president of networks David Ferry, who assumes a newly created executive director of and platforms business. role of chief engineer with the company’stelecomcareer global sales at Telstra R&D division in New Zealand. Global. He joined Telstra Phil Mottram Thuraya taps media from BT where he was director of sales services head Altair appoints VPs for BT’s Openreach. Mobile satellite services operator Israel-based Altair Semiconductor Han Willem Kotterman, currently Thuraya Telecommunications has has named Chee W. Kwan as VP of CSL’s acting CEO, has been promoted named John Huddle as its new head of worldwide sales and Uri Yaffe as VP of to executive director for strategy market development for media services. business development. and business development at Telstra He will oversee the development Prior to Altair Semiconductor, International Group. and execution of the company’s Kwan was VP of worldwide marketing Separately, Bill Xiang, former CEO global market strategies, pricing and and sales at BroadLight. Yaffe previously of ZTE Australia and New Zealand, operations of its MediaComms suite. founded and served as the CEO of has been named executive VP for mass Cellular Bridge, a business development market at CSL. Small Cell Forum appoints and consulting company focused on the chairman and CEO telecom and internet industries. New head for BT Global The Small Cell Forum has named Services Gordon Mansfield as its new chairman Clarity hires global sales BT has promoted and Graham Wright as CEO to handle VP Luis Alvarez to CEO of the day-to-day management of the Jon Collins has joined Clarity as SVP BT Global Services. Forum’s activities. for its global sales and alliances team. Alvarez will take over Mansfield, currently executive Before joining Clarity, Collins has from Jeff Kelly, who will director for small cell solutions and 30 years of experience and held senior continue to be part of RAN delivery at AT&T Mobility, roles in leading telecoms technology the BT team, becoming a Luis Alvarez succeeds Simon Saunders, who is companies including Telcordia senior executive advisor to BT in the US moving on after founding the Forum in Technologies, Syndesis, AT&T, Contel in a part-time capacity. 2007. ASC and Comsat UK. Alvarez has been with BT for 12 years The Forum has also announced its He also served on the board and the in a variety of roles, and is most recently new executive board which includes executive committee of the TM Forum president of BT Global Services Europe, representatives from: Airspan, Alcatel- for 6 years. Middle East, Africa and Latin America. Lucent, AT&T, Cisco Systems, Ericsson, InterDigital Communications, ip.access, IDC appoints telecom lead Alcatel-Lucent reshuffles Mindspeed, NEC Europe, Nokia Charles Reed Anderson has joined Alcatel-Lucent has Siemens Networks, Qualcomm, Radisys, IDC as associate VP and head of the announced a series of Softbank, Ubiquisys and Vodafone. telecom practice. Anderson will head management changes, the firm’s telecom research and co- as part of a restructuring Trend Micro gets new lead its mobility practice in APAC. that will be effective country manager Previously, he was head of innovation from January 1. Trend Micro has for APAC at BT Global Services. Paul Tufano will take named David Siah on the newly created Paul Tufano as country manager Contacting Telecom Career position of COO role in addition to his to lead its Singapore current role as the company’s finance operations. Siah joined Advertising: Gigi Chan chief. He takes responsibility for global Trend Micro from Tel: 852 2589 1338 Fax: 852 2559 7002 supply chain and procurement, and for Orion Health, a provider E-mail: gchan@telecomasia.net three individual focused businesses: of clinical workflow David Siah Editorial: Fiona Chau enterprise, strategic industries, and and integration technology for the Tel: 852 2589 1333 Fax: 852 2559 7002 submarine. healthcare sector. E-mail: fchau@telecomasia.net26 October 2012 Telecom Asia www.telecomasia.net

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Post ShowAsian Carriers’ Conference • September 3-7 • Cebu, the Philippines Wholesale players ponder bilateral automation T he wholesale sector may be suffering, with prices plum- Telstra’s Jim Clarke meting and volume growth slowing, but you wouldn’t know it by the 1,200 execu- tives who spent the better part of a week in Cebu, Philippines, in early Septem- ber ironing out bilateral deals with their many partners. Judging from discussions with a number of telcos, that’s a lot of voice and a bit of data. A common question when people would meet was “do you handle voice OR data?” So much for convergence. Doy Vea, chief wireless advisor at Smart Communications, set the tone for the wholesale gathering by boldly stating that: “It’s the end of the world ring to a new telecom wholesale-retail problems, which will continue into the for old business models”. He said that ecosystem.” future. according to Ovum, 75% of voice traffic Telstra Global’s Jim Clarke said in Epsilon Telecommunications CEO now is VoIP. Margins are continuously his presentation that as the line be- Andreas Hipp said that the rise of global being squeezed and increased volumes tween wholesale and retail gets blurred exchanges, such as network hubs, is cre- can only make up the gap for so long. the need for quality networks only be- ating new ways to interconnect, which Vea said the future is to “go retail,” comes more important. “Dumb pipes is driving a move away from the legacy which was the theme of the eighth in the future will be very important.” approach. Expanding volumes, lower Asian Carriers Conference – “Transfer- A common theme among the five prices of traditional wholesale services, plenary speakers was the im- short lead times and increasing techni- portance of IPX in enabling cal complexity, he claims, make it more Epsilon’s Andreas Hipp wholesale players to move difficult to manage everything in-house. up the value chain. Clarke “It is difficult to maintain your own said IPX will allow mobile infrastructure and interconnect base operators to offer faster at the required cost points to remain speeds, higher capacity competitive and flexible due to a lack of bandwidth and introduced scale,” Hipp said. Epsilon’s recommend- new services and apps. ed response to the crunch, naturally, is While IPX is expected to outsource to reduce the required in- to help operators innovate vestment and the risks. more rapidly, Edwin van Verizon Enterprises Solutions’ Carl Ierland from iBasis point- Roberts emphasized that telcos’ core as- ed out in the panel discus- set is the network, but “we have to rein- sion that it won’t slow the vent ourselves”. He believes operators are decline in prices and by in a position to fundamentally transform no means will fix telcos’ main the way businesses operate today.28 October 2012 Telecom Asia www.telecomasia.net

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berts Verizon’s Carl Ro With their global networks and ad-vanced connectivity strategies, Robertssaid carriers have the opportunity toimprove operational models in indus-tries such as health care and transpor-tation. Ian Watterson from CSG Interna-tional – who spoke on “How to swimwith the sharks and survive” – saidtelcos need to learn that they “can’t doit all” and need to partner, in relation- CSG’s Ian Watteships where both parties benefit. “In the rsoncontent supply chain it’s all about howto work out equitable revenue sharingdeals, which requires treating your part-ners as customer.” Given all the talk of the urgency ofmoving to all-IP networks, it comes as abit of a surprise that just 61% of telcos haven’t changed much and re-say they already have live voice traffic on main largely manual.migrated IP interconnections. One in The Cebu shindig isn’t aten say they haven’t yet or aren’t ready/ one-off negotiation mara-willing to start a migration project. thon. The wholesale crowd In his presentation, Philippe Mil- meets at PTC in Hawaii inlet, chairman of the i3forum, said while January and ITW in Chicago63% have a clear, aggressive IP-migra- in May – and many will alsotion strategy, 25% don’t really have a be at BARG in Greece thismigration strategy. These numbers were month.based on a small survey of done at ITW But help apparently is on the way.in May. A handful of carriers have set up the A representative for a large US telco Global Business Exchange for Telecom, who is with Deutsche Telekom, saidtold Telecom Asia there’s no econom- or GBET, which held a workshop at the that addressing these pain points will beic reason for an operator with TDM event. The founding members are Ve- a lengthy process but “a new approachswitches to replace them with IP con- rizon, TeliaSonera, Deutsche Telekom, to old problems” is essential as the ex-nections (for fixed voice). He reckons PCCW, iBasis and Telarix. change of data between carriers has be-ten years from now, there still will be The association’s goal is simple: come increasingly complex and costly.plenty of TDM switches around. improve back-office efficiency by auto- Verizon’s Henrik Liungman said mating the currently cumbersome pro- that the telecom industry “has a ways toManual processing? cesses of working out agreements and go in its level of maturity in streamlin- The ACC has quadrupled in size getting signoffs. The first step is setting ing processes. The banking industry hassince it was started eight years ago. In standards. GBET aims to announce a SWIFT for international transactions.”that time carriers’ methods for working contract management support system He noted that no one could imagineout interconnect agreements, some- at ITW next May. banks handling these manually. TAtimes with more than 100 other telcos, GBET chairman Margaret Morosi, – Joseph Waringwww.telecomasia.net Telecom Asia October 2012 29

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backpage briefing Wrong number – again Vodafone has pulled a TV advert in New Zealand after twice posting a phone number that was too similar to those of private customers. The operator first changed the number quoted in the ad after one New Zealander was bombarded with calls and texts seeking more details of a new data plan. However, the carrier made the same mistake with the new number, resulting in a second citizen receiving around 100 unwanted calls. TA Sex lands Google in hot water Google is facing accusations of political interference for refusing to run adverts for sex in Australia. Political group the Australian Sex Party has made a formal complaint alleging the search giant refused to run its publicity in the run up to a recent by-election. The party claims the refusal constitutes unlawful interference that benefitted rival political groups. Google claims the ads were refused because of the party’s tax status. TA Ex-lovers keep tabs on Facebook Authenticate images – If you’re worried about authorities monitoring your every move via social at a cost networks, think again. A picture used to tell a thousand words, but Fresh research suggests you should these days it’s more likely to be made up from a be more worried about your ex keeping thousand sources. tabs on you via Facebook than the police Now you can tell if your eyes are being or secret services. The research claims deceived thanks to a US startup, which has up to 50% of the social network’s users released software that probes the meta data utilize the site to monitor their exes, with in digital snaps to prove their authenticity. potentially damaging consequences to Fourandsix Technologies is the their emotional recovery. TA brainchild of a digital forensics boffin and a former Adobe Photoshop executive, but its software is likely to appeal only to security personnel as it costs $890. TA30 October 2012 Telecom Asia www.telecomasia.net